Mahindra & Mahindra - Focus On Scaling Up The Core Businesses: Nirmal Bang

Nirmal Bang Report

We recently hosted the management of Mahindra and Mahindra Ltd., as part of the two-day investor conference. The management highlighted the steps taken by the company in the last few years towards value creation.

M&M has exited several loss-making ventures and has successfully turned around others. Initially, the management had targeted earnings per share growth of 15-20% and return on equity of 18% for FY23. It ended up achieving remarkable revenue growth of 34% in FY23, exceeding its guided range of 15- 20%.

Over the past two years, M&M has also expanded its market share in farm segment by 3%. Furthermore, its farm machinery segment clocked strong growth of 38% in FY23.

The company holds a dominant market position in the sports utility vehicle and light commercial vehicle segments, with market share of 19% and 45%, respectively.

In the EV segment, M&M has started delivering XUV400; commercial production for its XUV will commence from December 2024 and the battery electric vehicle range will come to the market by April 2025-end.

In the internal combustion engine segment, the company has no plans for new launches, but will focus on expanding production capacity and reducing existing order backlogs.

Looking ahead, the management sees significant growth opportunities in the farm machinery segment as well, with an expected growth rate of 40%.

It also plans to expand its international business by 1.6 times by FY26-end. We estimate 12% compound annual growth rate in revenue over FY23-FY25.

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